Quantum of Corruption Money Earned by Public Officials

Quantum of Corruption Money Earned by Public Officials December 9, 2011

In a new book called “Corruption in India: The DNA and RNA”, authors Bibek Debroy and Laveesh Bhandari have estimated that India’s public servants loot Rs.92,122 crore ($18.42 billion), or 1.26% of the GDP due to corruption. They have used data from Central Statistical Organisation (CSO) to arrive at the figure.

The three main areas of the bribery loot are: transport industry, real estate and “other public services”.

They have arrived at a figure of Rs.14,594 crore ($2.92 billion) for the loot in the “other public services”. That may be completely off. For example just for National Rural Employment Guarantee Act (NREGA) programs, the money given out is $22 billion a year. And, the effectiveness of these programs in terms of Households receiving employment is roughly 3%.

Even if we take an effectiveness of 30% (which is WAY too much), we are talking of $15 billion just from ONE program! There are a number of such programs.

Lets take a look at the Real Estate area now. The numbers may be as bad. As per some estimates, just the various approvals add 20-30% to the builders cost in Mumbai itself.

Just as an indicator, we know that about $16 billion have been invested from 2006 until 2011 – roughly 5 years.

According to a report by Jones Lang LaSalle (JLL), about US$ 15.8 billion has been invested from 2006 till date on various types of assets in the real estate sector in the country. Of which, US$ 2.7 billion went to residential projects and US$ 2.4 billion to township projects. A sum of US$ 2.3 billion went to commercial projects, US$ 2.1 billion to mixed use and US$ 961.4 million to special economic zones (SEZs). During the current year, PEs invested US$ 320 million in commercial, US$ 65 million in mixed use, US$ 44 million in residential, US$ 190 million in SEZs and US$ 122 million in township projects.

This is the investment that is counted and documented. A lot of work happens undocumented in the black market. In fact, one can see in cities like that Delhi that 70-95% of the properties are sold and bought with black money – unaccounted for.

Let us take a conservative estimate that only 50% is unaccounted. Then we are talking of about $32-35 billion in 5 years – or $6-8 billion a year. We are talking of just the approvals taking 20-30% away in bribes. That may be $1.5 billion a year!

The book puts the entire corruption money around the country to be around $2.5 billion, which seems to be closer to ball-park.

Real estate and related business services involving registration of property and stamp duties account for Rs.12,534 crore ($2.5 billion) in corruption.

The other areas of corrupt money are also pretty large.

Bribery at multiple checkpoints and by revenue officials, police and customs in the transport sector generate Rs.11,267 crore ($2.25 billion) in corruption, the authors say. The book estimates bribery amount from illegal mining, theft from public mines and licensing at Rs.9,578 crore ($1.91 billion).

This is followed by corruption in government procurement (Rs.9,144 crore or $1.82 billion). Bribe taking by inspectors, police and local bodies in unregistered manufacturing totals Rs.6,600 crore ($1.32 billion).

It is their statement on the state of corruption that is extremely damning.

Undoubtedly corruption has taken over India. It rules over the country with its stranglehold in every aspect of the state and consequently in all aspects of life of citizens.

(Image courtesy: Economist)

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